Yale lost 25% of its endowment in 2008, through investment write-downs. Yale was famous for gaining 16% a year for 10 years, tripling the endowment. They did this through alternative investments, like real estate.
That worked well earlier, when real estate jumped and the stock market was flat. All the other big endowments followed Yale.
Every foundation or endowment spends from the total, so a significant loss means a reduction in funds for the future. Since the bi-partisan recession is universal and global, everyone is seeing the same losses.
So what happens with these illiquid (hard to sell) investments? When the funds are short and the bonds are not producing, they will have to sell stock. One expert predicted that some endowments could run out of cash in two years.
That means the foundation-dependent congregations are going to be howling for more funds, but the cash will be greatly reduced or gone.
